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Public Utilities 2017/01/25CITY OF ANAHEIM PUBLIC UTILITIES BOARD MINUTES January 25, 2017 The agenda having been posted on Thursday, January 19, 2017, the Workshop of the Public Utilities Board (Board) was called to order by L. Cahill, Acting Vice -Chairperson, at 3:00 p.m. on Wednesday, January 25, 2017, in the 11th Floor Large Conference Room, Anaheim West Tower, 201 S. Anaheim Blvd., Anaheim, California. Board Members Present: B. Hernandez, D. Wain., A. Abdulrahman, E. Medrano, L. Cahill Board Members Absent: Chairperson J. Machiaverna Staff Present: D. Lee, A. Kott, G. Bowen, M. Robledo Guest(s) Present: Jody Cross, Industry Affairs Manager, Craig Williams, Lead Client Trainer, California Independent System Operator WORKSHOP ACTION TAKEN 3:00-5:00 P.M. — OVERVIEW OF CALIFORNIA INDEPENDENT SYSTEM OPERATOR (CAISO) SCHEDULING TRANSMISSION. J. Cross and C. Williams provided a presentation about the governance of the California Independent System Operator (CAISO), its role as a balancing authority, how it manages the electric utility loads and resources within California, and how the Department interacts and participates within the CAISO as a transmission owner, distribution operator, and load serving entity. The speakers also provided insight as to the factors required to maintain high reliability and operate stable energy markets in California. The Board asked a series of questions pertaining to how the CAISO impacts Anaheim in terms of reliability, costs, and operations. C. Williams provided an explanation of how regional blackouts occur by showing the impacts of the San Diego outage on the regional grid. 5:00 P.M. — PUBLIC UTILITIES BOARD MEETING Acting Vice -Chairperson L. Cahill called the Public Utilities Board Meeting to Order at 3:01 p.m. Acting Vice -Chairperson L. Cahill recessed the Public Utilities Board Meeting at 4:25 p.m. Board Members Present: Chairperson J. Machiaverna, Vice -Chairperson D. Wain, B. Hernandez, A. Abdulrahman, E. Medrano, L. Cahill Board Members Absent: None 2017-1 ITEM NO. 01 Staff Present: D. Lee, M. Moore, L. Quiambao, J. Lehman, A. Kott, B. Beelner, G. Bowen, J. Lonneker, P. Oviedo, T. McCarthy, L. Davis, P. Hayes, J. Wei, S. He, A. Kanzler, M. Seifen, A. Muniz,, L. Nugent, M. Robledo, P. Hayes Guest(s) Present: Bill Connell, ABB Inc., C. Norman, Policy Aide to S. Faessel, N. Bartash, Council Aide to S. Faessel Chairperson J. Machiaverna reconvened the Public Utilities Board meeting at 5:01 p.m. AGENDA ITEM ACTION TAKEN 1. PUBLIC COMMENTS. There being no further public comments, B. Connell, from ABB Inc., introduced himself and thanked Chairperson J. Machiaverna Board members and staff for allowing him to be there to answer closed the public comments questions regarding Agenda Item No. 7. portion of the meeting. 2. ELECTIONS FOR BOARD VICE -CHAIRPERSON AND By voice vote, the Board ONE MEMBER OF THE UNDERGROUNDING elected D. Wain as Vice - SUBCOMMITTEE. ** Chairperson of the Public Utilities Board. A. Kott, Assistant City Attorney, opened the floor for MOTION CARRIED: 6-0. nominations for Vice -Chairperson. J. Machiaverna nominated D. ABSTAINED: 0. Wain, who accepted the nomination. B. Hernandez moved to ABSENT: 0. close the nominations and L. Cahill seconded the motion. By voice vote, the Public Utilities Board members elected D. Wain as the Vice -Chairperson of the Public Utilities Board. A. Kott opened the floor for nominations for member of the By voice vote, the Board Undergrounding Subcommittee. J. Machiaverna nominated E. elected E. Medrano to serve Medrano who accepted the nomination. B. Hernandez moved to on the Undergrounding close the nominations and L. Cahill seconded the motion. By Subcommittee. voice vote, E. Medrano was elected to serve on the MOTION CARRIED: 6-0. Undergrounding Subcommittee. ABSTAINED: 0. ABSENT: 0. 3. APPOINTMENT OF ONE MEMBER TO THE PUBLIC Chairperson J. Machiaverna appointed D. Wain who accepted the Chairperson J. Machiaverna appointment to the Public Utilities Hearing Board. appointed D. Wain to the Public Utilities Hearing Board. 4. APPROVAL OF THE MINUTES OF THE REGULAR E. Medrano moved approval PUBLIC UTILITIES BOARD MEETING OF DECEMBER of the Minutes of the 14, 2016. * Regular Public Utilities Board Meeting of December 2017-2 14, 2016. B. Hernandez seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 0. 5. PRESENTATION ON STATE CONSERVATION AND DROUGHT PLAN FRAMEWORK. T. McCarthy, Engineering Manager, discussed the draft report from the State of California titled "Making Water Conservation a California Way of Life, Implementing Executive Order B-37-16". T. McCarthy explained that this report is the Governor's plan for long—term water conservation in California. T. McCarthy explained why the report was needed, the compounding of drought, environmental demands, and the growth of California population. These three factors have shown some vulnerability in water supplies for the State. He addressed key areas of the report that impact how the Anaheim Public Utilities Department (Department) does business which include the planning of drought resilience and working with water budgets, and how it affects our customers. Drought resilience planning will likely include more reporting to the State and possible intervention by the State regarding how the Department responds during a drought. In addition, T. McCarthy indicated water budgets are being proposed that will prescribe the amount of water that can be used by residential customers. The water budgets and other elements of the plan are strongly oriented towards budget based or tiered rates, this could impact the Department's rules, rates, billing, and customer privacy. Lastly, T. McCarthy indicated that the plan is scheduled to be finalized in January of 2017 and implementation of the proposed plan is scheduled for 2019 with full implementation by 2025. The Board asked questions about how these types of rate impacts would affect local residents and businesses. Staff responded by explaining that the plan proposed by the State has support due to its responsiveness to drought mitigation and pricing signals to drive conservation. Staff expressed concerns over privacy matters and loss of control over local ratemaking; however, the current regulatory environment favors tighter restrictions in water use in urban areas. 6. APPROVAL OF AGREEMENT BETWEEN THE CITY OF L. Cahill moved approval of ANAHEIM AND VIRTUAL HOLD TECHNOLOGY, LLC the agreement between the TO PROVIDE A VIRTUAL HOLD CUSTOMER QUEUING City of Anaheim and Virtual AND CALL BACK SOFTWARE SYSTEM. * Hold Technology, LLC to provide a virtual hold B. Beelner, AGM — Finance and Administration, presented the customer queuing and call proposed service agreement between the Department and Virtual back software system. B. Hold Technology, LLC (Agreement). This Agreement will Hernandez seconded the 2017-3 implement a virtual queueing software service for the Department motion. call center. B. Beelner explained that this service will give MOTION CARRIED: 6-0. customers the opportunity to receive a phone call without losing ABSTAINED: 0. their place in the phone queue or having to wait on hold, which ABSENT: 0. provides convenience and reduces frustration for customers. B. Beelner explained that customers will have the option to receive a call back, schedule a call back, or request to be put into the phone queue from the Department's webpage. He further explained that this Agreement is for cloud -based services therefore no hardware purchases are required. The Board asked how the Department knew the current number of call backs per month. B. Beelner explained that by analyzing how long the average hold time was and looking at how many customers accepted a call back offer, the calculation showed that on average the Department should receive about 3,000 call backs per month. Furthermore, B. Beelner indicated that the monthly call back number can be raised or lowered based on the actual call volumes, to stay within the approved annual amount in the Agreement. 7. APPROVAL OF A DESIGN -BUILD SERVICES AGREEMENT WITH ABB INC. FOR THE HARBOR SUBSTATION PROJECT AND ADOPTION OF A MITIGATED NEGATIVE DECLARATION AND MITIGATION MONITORING PLAN PURSUANT TO THE CALIFORNIA ENVIRONMENTAL QUALITY ACT. * Before presentation and discussion of this Item began, E. Medrano announced that he would not participate in the discussion or vote because of a potential conflict. He indicated he is employed by the Los Angeles / Orange Counties Building and Construction Trades Council which represents 48 local unions and district councils some of which may become involved in this construction project so his employer may receive some financial benefit as a result of this Item. E. Medrano left the room and did not return until after the Chair announced the next item. L. Davis, Capital Projects Manager, provided the Board with a B. Hernandez moved presentation on the proposed Harbor Substation Project, the approval of the Design - criteria, and evaluation process used for selecting the proposed Build Services Agreement design -build contractor. L. Davis indicated that the evaluation between the City of criteria for the project included experience with high density Anaheim and ABB Inc. for urban settings, knowledge of installation of gas insulated the Harbor Substation substations, conceptual plans for engineering and construction, Project. D. Wain seconded and record of success on prior projects. Furthermore, L. Davis the motion. indicated references from other utilities, project team members, MOTION CARRIED: 5-0. local hiring emphasis, interview responses and price were also ABSTAINED: 0. factors that were taken into consideration during the selection ABSENT: 0. process. 2017-4 L. Davis then described the Electric System Planning process and why it is critical that we build the substation to reliably serve existing customers and provide the necessary operational flexibility to respond to outage situations with anticipated development activity in the area. He explained that the Department had conducted outreach to customers within 1,000 feet of the proposed substation including personally meeting with all customers in the direct proximity of the site. The Board asked about the merits of design -build process, and how effective it has been in the past. Staff responded that it is useful on large-scale projects, like substations, because of the scope, complexity, and necessary coordination among many entities, and was successfully implemented on prior substations and a generation project in Anaheim. 8. APPROVAL OF THE RENEWABLES PORTFOLIO STANDARD POLICY, 2017 UPDATE. * G. Bowen, AGM — Power Supply, provided the Board with an update on the Department's annual Renewables Portfolio Standard (RPS) Policy. He provided an update on the Department's activities in 2016 stating that the Renewables Portfolio Standard target was changed from 33% renewable energy serving customer load by 2020, to 50% by 2030. He also indicated that the Department is required to develop and recommend an Integrated Resource Plan (IRP) for review by the Board and consideration by City Council for approval on or before January 31, 2019. G. Bowen also made the Board aware that the end of the second Compliance Period ended in 2016 which set a target of 25% renewables supplying the City's load by the end of 2016, was met for the period. G. Bowen also highlighted some of the resources procured by the Department in 2016 to meet its compliance target, highlighting that much of the renewable energy came from several different states including California, Wyoming, Colorado, Idaho, and Washington. G. Bowen also explained the cost limitation provision which is designed to protect customers from excessive rate increases as a result of increased costs related to meeting RPS compliance targets. He indicated that it was set at 17% of the Department's annual power supply budget and the current total was 4% as result of the Department taking advantage of lower renewable energy costs in the market. 2017 - 5 L. Cahill moved approval of the Renewables Portfolio Standard Policy, 2017 update. E. Medrano seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 0. 9. DISCUSSION ON THE QUARTERLY STATUS REPORTS ON CAPITAL IMPROVEMENT PROJECTS, MASTER AGREEMENTS, GENERAL SERVICE AGREEMENTS, AND SPOT BID AWARDS. M. Moore, AGM — Water Services, and J. Lonneker, AGM -- Electric Services, provided the Board with the status report of Capital Improvement Projects, Master and General Service Agreements, and Spot Bid purchases for the fourth quarter of 2016. M. Moore highlighted the La Palma Complex Reservoir rehabilitation project that is currently in progress and expected to be completed in mid -2018. Also, several water main replacement projects were completed as part of the Department's infrastructure modernization efforts. J. Lonneker highlighted the completion of the 11" phase of the direct buried cable replacement program. The diversity of projects throughout the Districts was noted by the Board. Lastly, M. Moore indicated if any of the Board members are interested in touring any of the facilities, they should contact P. Oviedo for arrangements. 10. UPDATE ON WATER SYSTEM ISSUES. M. Moore provided the monthly water supply update. M. Moore indicated that the local and statewide precipitation levels have been a tremendous boost to improve regional water storage. He explained to the Board that the above ground storage levels are filling quickly throughout the State. In addition, the Department's local groundwater basin is also recharging from the storm water runoff. However, M. Moore indicated it takes much longer to accumulate water into the groundwater basin, so it will take a few years of substantial rainfall to bring the levels back to normal. 11. UPDATE ON ELECTRIC SYSTEM ISSUES. J. Lonneker made the Board aware that the City activated the Emergency Operations Center (EOC) on Sunday, January 23 2017, due to wet weather conditions impacting the roads throughout the City. The Department had a representative present at the EOC providing updates on power outages and the availability of line crews. J. Lonneker indicated there were six weather related outages that occurred over relatively small areas impacting approximately 365 customers with an average of 3.5 hours to restore power. In addition, there was a momentary blink on one circuit affecting 1,925 customers for 10 seconds. J. Lonneker mentioned the Department's system, compared to surrounding utilities, performed well, and Department staff worked effectively to minimize outage durations. 2017-6 Lastly, J. Lonneker made the Board aware that the northern California utility, Pacific Gas and Electric (PG&E), requested mutual aid from all utility partners including Anaheim, and the Southern California Public Power Association (SCPPA) member utilities to provide 20 line crews to assist in storm outage restoration. The request was concurrent with our own storm restoration and the Department's electric operations assessed that line crews were needed for local outage repairs at that time and availability was limited. 12. UPDATE ON FINANCE ISSUES. B. Beelner, AGM — Finance and Administration, discussed the monthly dashboard with the Board. B. Beelner mentioned that due to the continued warm weather through the summer and fall seasons, electric revenue was 5.2% higher than budget ($12.OM) with costs coming in below budget by 5.5% ($11.3M). He then mentioned that water revenue was 7.3% ($29M) below budget due to continued conservation; however, costs were 17.4% below budget ($6.OM) causing a positive net budget variance. B. Beelner then discussed upcoming proposed rate actions, which will require a rate hearing slated to be held at the March Board meeting. B. Beelner mentioned that water rates are proposed to increase due to rising water supply costs and continued investment in infrastructure while electric rates are projected to decrease due to falling power supply and natural gas prices. The net effect for a typical customer that uses 500 kWh of energy and 16hcf (hundred cubic feet) which is approximately 12,000 gallons of water per month would be approximately $1.60 per month ($3.20 bi-monthly) which amounts to an approximate 1% increase. Lastly, B. Beelner indicated that a full presentation will be made to the Board at the February meeting to present this issue in greater detail. 13. UPDATE ON POWER SUPPLY ISSUES, G. Bowen, AGM — Power Supply, provided an update on the Department's overall power supply portfolio. G. Bowen indicated that market prices are slightly lower this month than the previous month and he anticipates that lower prices will continue throughout the winter and spring seasons. G. Bowen also provided an update on acid leak that occurred at the Magnolia Power Plant in Burbank, California on January 15, 2017. G. Bowen explained that the leak was from the acid storage tank that is used to treat the water in the steam generator process. The root cause analysis determined that a "Blank Flange" located at the bottom of the tank developed a leak due to failure of a seal and corrosion. In addition, the secondary containment system failed due to a caulk sealer around a pipe which did not withstand the acid. G. Bowen mentioned that new 2017-7 Staff will provide a presentation with further information regarding water rates in February. Teflon seals will be installed rather than the rubber material that was initially used in the tank construction. Lastly, G. Bowen made the Board aware that the Kraemer facility incurred a 30 -day outage due to corroded boiler piping that had to be replaced. He indicated that the piping was buried without any protection, causing corrosion. G. Bowen indicated that the facility was built in 1989 and that staff was in the process of identifying other piping in the facility that was also buried in order to develop a prioritized replacement schedule. 14. UPDATE ON ENTERPRISE RISK, COMPLIANCE, AND LEGISLATIVE & REGULATORY AFFAIRS ISSUES. J. Lehman, Chief Risk Officer, updated the Board on the Internal Compliance Report. She highlighted that the are flash incident involving a lineman and an apprentice brought up in October is being investigated by the Occupational Safety and Health Administration (OSHA). J. Lehman indicated that an OSHA report is not expected until mid-March and there may potentially be violations associated with the incident. J. Lehman then provided an update on legislative and regulatory efforts, mentioning that several bills have already been introduced that could potentially impact operations, although they were in draft form and likely to go through significant changes. She indicated to the Board that she had meetings in Sacramento the following week with Anaheim representatives and their staff to discuss the Department's perspective on upcoming legislation. J. Lehman let the Board know that the Department had received the Drinking Water Permit amendment which requires testing of water at schools for lead upon request, but that this is expected to be of minimal impact because this service is already offered. She mentioned that schools are responsible if any remediation action is required and a recently passed federal bill, S. 612, has potential funding opportunities for schools if remediation actions are necessary. Lastly, J. Lehman added to the previous information on the activation of the EOC over the past weekend, that it was an opportunity to exercise and test emergency management procedures, internal communications, and EOC reporting during a live event. 15. AGENDA ITEM(S) FOR THE PUBLIC UTILITIES BOARD MEETING ON FEBRUARY 22, 2017. D. Lee stated the following items are planned for the following Board meeting: 2017-8 • Water and Electric Rates Presentation • Approval of Annual Energy Efficiency Goals for AB2021 • Southern California Public Power Authority (SCPPA) Bi - Annual Report • Agreement with Orange County Sanitation District for the State College Project * 16. ITEMS(S) BY SECRETARY. D. Lee and M. Seifen provided an update on a social media contest where customers provided photos of how they are capturing rain, and are eligible to receive a rain barrel. Three contestants had won barrels showing creative solutions at their homes. D. Lee provided an update on the status of Anaheim Boards and Commissions based on the discussion by City Council. The item was carried to the following Council Meeting on February 7 to discuss potential alternatives. 17. ITEM(S) BY BOARD MEMBERS: A. Abdulrahman thanked staff for the information that was provided and found the workshop about the CAISO very useful and educational. D. Wain thanked staff for the meeting and appreciated the updates given regarding electric services, and also found the CAISO workshop to be informative. E. Medrano thanked the Department for the power plant tour he was provided, and mentioned that it is helpful to see first-hand how the power plant is operated. He highlighted the Department's efforts to introduce the Virtual Hold Software to customer service indicating he believes this will be very helpful for customers. L. Cahill thanked staff for the workshop about the CAISO; he stated it was very educational. He is also looking forward to the construction of the Harbor Substation project. B. Hernandez addressed his concern in regards to the Board and Commission members and the potential loss of experience. D. Lee encouraged Board Members to reach out to City Council to express their viewpoints. J. Machiaverna agreed with the concern about Board and Commission appointments. He also encouraged Board Members to reach out to City Council Members. 2017-9 18. ADJOURNMENT: (REGULAR MEETING ON FEBRUARY 22, 2017, AT 5:OOP.M., IN THE 11TH FLOOR LARGE CONFERENCE ROOM, ANAHEIM WEST TOWER, 201 S. ANAHEIM BOULEVARD, ANAHEIM, CALIFORNIA). Dukku Lee Public Utilities General Manager B. Hernandez moved approval to adjourn the Regular Meeting at 6:51 p.m., to the Board's Regular Meeting date of February 22, 2017 at 5:00 p.m. E. Medrano seconded the motion. MOTION CARRIED: 6-0. ABSTAINED: 0. ABSENT: 0. * Indicates item(s) that will be forwarded to City Council for action upon recommendation by the Board. ** Indicates item(s) that will be forwarded to City Clerk and City Council for informational purposes. 2017-10